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Futures tumble as tech selloff deepens; Fed meeting eyed

Stock MarketsJan 26, 2022 01:09
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© Reuters. A screen charts the Dow Jones Industrial Average during the trading day on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 24, 2022. REUTERS/Brendan McDermid

By Bansari Mayur Kamdar and Devik Jain

(Reuters) -Wall Street futures fell on Tuesday as a selloff in technology stocks ahead of the Federal Reserve's policy meeting overshadowed upbeat results from blue-chip companies including IBM (NYSE:IBM) and 3M (NYSE:MMM).

The Fed is expected to convene its two-day monetary policy meeting later in the day, which will be watched closely for cues on the central bank's timeline for hiking key interest rates to combat inflation.

Fed funds futures traders are pricing in a 25 basis points hike in March, in addition to three more rate increases by the end of the year.

"It just looks like the market is reacting to new reality of tighter policy from the Fed ... you probably don't see anybody take any huge bets ahead of that meeting on Wednesday," said Dan Eye, chief investment officer at Fort Pitt Capital Group.

Geopolitical tensions between the West and Russia over Ukraine have added to uncertainty. The U.S. Department of Defense said about 8,500 American troops were put on heightened alert.

U.S equities had a turbulent start to 2022 with the S&P 500 coming close to confirming a 10% correction on Monday after starting the year on a record high and the tech-heavy Nasdaq tracked its worst start to the year since 1980.

The Dow erased a 1,000-point decline to close higher on Monday for the first time ever, according to Bespoke Investment Group.

The quarterly earnings season is in full swing, with mega-cap growth company Microsoft (NASDAQ:MSFT) set to report earnings after market close on Tuesday, followed by Apple (NASDAQ:AAPL) and Tesla (NASDAQ:TSLA) later this week.

As of Monday, earnings from S&P 500 companies were expected to grow 23.7% year-over-year, according to IBES estimates from Refinitiv.

IBM added 0.6% in premarket trading after the IT giant beat quarterly Wall Street estimates for revenue and profit, while 3M rose 1.1% after beating market estimates for its fourth-quarter results..

American Express Co (NYSE:AXP) jumped 3.5% on upbeat fourth-quarter profit, while another Dow component, Johnson & Johnson (NYSE:JNJ), was flat after missing estimates for fourth-quarter revenue.

General Electric (NYSE:GE) Co fell 4.3% after the industrial conglomerate posted downbeat quarterly revenue.

"Economic data has been a bit squishy lately, and Q4 earnings are certainly good, but they're more in line with expectations compared to the huge beats that we've seen over the last four quarters," added Eye.

At 8:34 a.m. ET, Dow e-minis were down 317 points, or 0.93%, S&P 500 e-minis were down 72.5 points, or 1.65%, and Nasdaq 100 e-minis were down 319 points, or 2.2%.

Investors will be eyeing consumer confidence data later in the day for clues on economic health after the resurgence of COVID-19 cases due to the Omicron variant.

Futures tumble as tech selloff deepens; Fed meeting eyed
 

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